The U.S. Congress Discovers New York’s Medicaid Program

The federal House of Representatives is not the most popular group of politicians these days, and for good reason. So it must have provided a bit of schadenfreude to write an oversight report about the doings of what ought to be an even less popular body: the New York State legislature.

I came upon this report while doing a search to see if anyone had linked on of my posts on Medicaid spending by state, and came upon this 2013 report instead. According to a bipartisan report by the Congress New York State’s Medicaid is rife with waste, fraud and mismanagement. In part because “in the last decade, at least half a dozen elected State representatives, including two State Senate Majority leaders, have been convicted of theft, bribery, or honest services fraud, related to health care.” The fraud was also bipartisan, and both Democrats and Republicans are fingered for blame. So is the federal Centers for Medicare and Medicaid Services (CMS), for its failure to crack down on New York and get the federal government’s money back.

The oversight committee finds that New York’s Medicaid program is by far the most costly for the federal government of any state. There are a number of reasons for this: more generous services, a relatively high poverty rate, and a relatively high per capita income, which corresponds with a relatively high cost of living. The high poverty – high income combination is a rarity, found basically in New York, California, and the District of Columbia. All of these are legitimate reasons for higher Medicaid spending in New York.

But even if one adjusts for these factors, as I did in my three-part overview of Medicaid, and even compared with the adjacent, relatively high tax, relatively generous, relatively high-income Northeastern states, New York’s Medicaid spending has been extreme. Having already been drained for the state and local share of Medicaid, New Yorkers are now being drained for the federal share of Medicaid. “In the past four years,” according to the report, “the Federal Government has successfully sued New York for unlawful Medicaid expenditures twice, recovering more than $600 million.”

And they want more. New York’s Medicaid fraud is a source of free money for the federal House of Representatives the way Wall Street fraud has been a source of free money for New York State. Even if no additional fraud were to occur, the past fraud is enough to provide an ongoing source of money for the federal government and further gut public services in New York, the state with the nation’s highest tax burden.

And there is no way that fraud is going to stop. The high level of Medicaid spending I show is not across the board. It is on services associated with senior citizens, primarily, and a few other categories. The data showing this has been readily available for decades. Far from being across the board, the distribution of “waste, fraud and abuse” corresponds with the distribution of political power in Albany. The other source of high spending is people from other states coming here for services. The federal House of Representatives didn’t talk about that in their report.

So who will be made worse off to pay for all the past Medicaid fraud, and in what way? Who will be made worse off to pay for all the huge debts foisted on the MTA? To pay for all the retroactive pension increases over 20 years? To pay for all the taxes those in special categories, such as retired public employees, don’t have to pay?

I can tell you two groups that can be sure they won’t be making any sacrifices at all. Those who have already cashed in and moved out, or passed on. And the members of the New York State legislature and their friends, relatives, cronies and hangers on.